Bitcoin Forks Explained: Known Hard Forks So Far
There are cryptocurrencies such as Bitcoin Cash and Bitcoin SV that belong to the same Bitcoin family, with some fundamental similarities and differences in their Bitcoin technology.
What led to the emergence of these new versions? How do they differ from each other? Let us first begin by trying to understand these offshoots of Bitcoin.
During a hard fork, the software in which bitcoin and mining procedures are implemented is updated; once a user updates their software, this version discards all transactions from the older software, effectively creating a new branch of the blockchain. Users who keep the old software, however, continue to process transactions, which means that there is a parallel set of transactions taking place on two different chains. A blockchain fork is simply an update of the network initiated by developers or the cryptographic community.
There are two generally accepted types of forks, depending on the strength of their influence: soft forks and hard forks.
Bitcoin forks and their types and functions
Hard and soft forks are the two types of bitcoin forks, representing updates or changes to the protocol that occur on the blockchain. Simply, a hard fork involves the creation of an entirely new chain, while a soft fork is more of an optional update that is backwards compatible.
Backwards compatibility is actually what creates the hard fork, as miners creating blocks based on the new update will not accept blocks from miners running the old chain, thus creating a new independent chain. Hard forks are usually modifications to the protocol, while soft forks are more like optimisations. A soft fork does not involve the creation of a new circuit.
Soft Bitcoin fork
The soft fork has a minor update and only needs to update most nodes to the latest version. It is “backward compatible”, which means that the upgraded circuit can successfully share and use data from previous versions of the network. Soft forks make minor changes and do not detach themselves from the parent chain.
Hard Bitcoin fork
Hard forks involve big changes and require all nodes to switch to the new rules. In most cases, they involve a permanent separation from the old chain, making the newer one incompatible with the older version, as in the case of Bitcoin Cash. The Bitcoin fork was created through a hard fork, as a result of disagreement within the Bitcoin community on speed, transaction fees and block sizes, or to add more functionality to the existing version of Bitcoin.
So far there have been 100 forks of BTC, of which 74 versions have survived and are still functioning. The most popular are Bitcoin Cash, Bitcoin SV, Bitcoin Gold, Bitcoin XT, Bitcoin Classic, Bitcoin Unlimited, etc.
Bitcoin Cash, Bitcoin SV, Bitcoin Gold
Bitcoin Cash (BCH)
- It appeared as a result of a hard fork in August 2017.
- One of the loudest bitcoin forks.
- The Segwit2x update was proposed by part of the bitcoin community to scale the blockchain by increasing block sizes and reducing transaction fees.
- However, Segwit2x would have burdened both miners and node operators, who would have had to store an excessive amount of data.
- The proposal led to the creation of a hard fork, Bitcoin Cash (BCH).
- BCH is the largest fork on the network and is considered an electronic currency.
- Its block size is 32 MB, while BTC has a block size of only 1 MB.
- Transaction costs are significantly lower and transaction speed is faster: 200 TPS compared to BTC’s 5-7 TPS.
- Bitcoin Cash has branched out further and split into Bitcoin Cash ABC and Bitcoin Cash Node.
Bitcoin Gold (BTG)
- Bitcoin Gold is a hard fork that followed shortly after Bitcoin Cash, in October 2017.
- The creators of this hard fork aimed to restore functionality for mining with basic graphics processing units (GPUs), as they felt that mining had become too specialised in terms of the equipment and hardware required.
- One of the unique features of the Bitcoin Gold hard fork was ‘pre-mining’, a process in which the development team mined 100,000 coins after the fork.
- Many of these coins were put into a special ‘endowment’ and the developers have indicated that this endowment will be used to grow and fund the bitcoin gold ecosystem, with a portion of these coins also set aside as developer remuneration.
- Overall, bitcoin gold adheres to many of the fundamentals of bitcoin. However, it differs in terms of its proof-of-work (PoW) algorithm.
Bitcoin Diamond (BCD)
- Bitcoin Diamond, launched in 2017, is another offshoot of Bitcoin that aims to make transactions faster and cheaper.
Bitcoin Private (BTCP)
- Bitcoin Private was launched in March 2018 and is designed for transparent and secure or private transactions.
- Instead of being a fork of standard blockchain, the goal of Bitcoin Private (BTCP) was to create a fork-merge that would create a merger with the ZClassic (ZCL) blockchain by forking the Bitcoin blockchain.
- This project was led by Rhett Crichton, who also founded ZClassic, with the idea of combining the privacy of ZClassic with the popularity and security of Bitcoin.
Bitcoin Satoshi Vision (BSV)
- In November 2018, BSV was created through the efforts of Australian computer scientist Craig Wright, who convinced the community to increase the block size of BCH to 128 MB.
- Bitcoin SV has expanded the block size to 1 TB, obviously much larger than Bitcoin.
- The transaction costs of BSV are the lowest among the three Bitcoin variants, and the transaction speed is high, at 9000 TPS, due to the large block size.
- BSV uses the Bitcoin Scaling Test Network (STN) platform to achieve the desired scalability.
- Educational platforms such as Bitcoin SV Academy and the Gravity banking app offer the greatest opportunities for BSV adoption.
- Supporters of BSV describe it as a true peer-to-peer financial infrastructure, true to the vision of Satoshi Nakamoto (the famous pseudonym who created Bitcoin).
Main similarities between Bitcoin versions
In just a few years, bitcoin has already created a large number of forks. Although no one can say for sure, it is likely that the cryptocurrency will continue to experience both soft and hard forks in the future, which will continuously grow the cryptocurrency community, but will also make it increasingly complex. All three Bitcoin variants have the same available amount of 21 million coins. The total supply of the three coins is expected to run out by 2140. Both BCH and BTC operate on the same consensus mechanism model. Like Bitcoin, the BCH blockchain offers transparency, is publicly available and cannot be altered by one person.
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Author: Dean Dec
Dean is a passionate advocate for the financial freedom and independence offered by Bitcoin and the cryptocurrency space. Enthusiastic about the cutting-edge technology and the dynamic community behind it, Dean enjoys sharing valuable insights and empowering others to embrace the transformative potential of digital currencies.
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